Blackout Bombshell: Texas Guv Knew of Gas Shortages for Days – Blamed Clean Energy Anyway

May 21, 2021

Shot.

Ars Technica:

Texas Governor Greg Abbott’s office knew of looming natural gas shortages on February 10, days before a deep freeze plunged much of the state into blackouts, according to documents obtained by E&E News and reviewed by Ars.

Abbott’s office first learned of the likely shortfall in a phone call from then-chair of the Public Utility Commission of Texas DeAnne Walker. In the days leading up to the power outages that began on February 15, Walker and the governor’s office spoke 31 more times.

Walker also spoke with regulators, politicians, and utilities dozens of times about the gas curtailments that threatened the state’s electrical grid. The PUC chair’s diary for the days before the outage shows her schedule dominated by concerns over gas curtailments and the impact they would have on electricity generation. Before and during the disaster, she was on more than 100 phone calls with various agencies and utilities regarding gas shortages.

After the blackouts began, Abbott appeared on Fox News to falsely assert that wind turbines were the driving force behind the outages.

Deep in the heart of Texas’ collapsing power gridWind turbines were a factor, but only a small one. Wind in Texas doesn’t produce as much power in the winter, and regulators don’t typically rely on wind turbines to provide significant amounts of power. Instead, regulators anticipated that natural gas and coal power plants would meet demand.

In public, Bill Magness, then-CEO of ERCOT, the state’s electric grid regulator, didn’t seem concerned about the approaching weather. In a virtual meeting on February 9, Magness said, “As those of you in Texas know, we do have a cold front coming this way… Operations has issued an operating condition notice just to make sure everyone is up to speed with their winterization and we’re ready for the several days of pretty frigid temperatures to come our way.” During the two-and-a-half-hour public portion of the meeting, Magness devoted just 40 seconds to the unusual weather.

The first sign of trouble came the next day, when Magness, concerned that supply wouldn’t match demand, asked customers to conserve energy. Later that day, Walker took a call from officials at energy provider Vistra Corporation, which told her that several of its power plants had received notices that natural gas supplies would be curtailed.

Curtailing the flow of gas usually happens when cold weather increases demand or damages infrastructure. In Texas, both happened. The higher demand could be anticipated, but the problems with the natural gas infrastructure, detailed in a US Department of Energy situation report, were particularly troubling. Wellheads were “freezing off,” and gas processing facilities were dropping offline due to the cold weather, sharply reducing production that would feed the region’s pipelines.

Walker noted her call with Vistra in her diary and phone log for February 10-19, which she produced at the behest of the State Senate Committee on Business and Commerce. The document provides a striking blow-by-blow account of what was happening behind the scenes as bitter winter weather brought down Texas’ grid. “I received information from Vistra Corporation that they had received notices of gas curtailments at several power plants. I notified the Governor’s office and Chairman Hancock about the information from Vistra,” she wrote, referring to State Senator Kelly Hancock, chair of the committee.

Also on February 10, Walker followed up with the chair of the Texas Railroad Commission, the regulator that oversees gas pipelines, and the leadership of the Texas House and Senate to inform them of the impending problem. She also spoke with utilities and power companies, as well as their major customers. “I began discussions with representatives of the Texas Industrial Electric Consumers, in an attempt to resolve concerns that the gas curtailment issues could raise with electric generators. I spoke with representative of generators about the impact the gas curtailment would have on generation and began discussions with the various parties to resolve those concerns,” she wrote.

Gas curtailments dominated Walker’s schedule for the next three days.

On February 12, the Railroad Commission issued an emergency order dictating which customers should be prioritized for natural gas deliveries, and late on February 14, Texas’ grid finally began collapsing. In two text messages sent around midnight, ERCOT chief Magness told Walker that some wind turbines had frozen and several fossil fuel generators had tripped offline. Blackouts began just before 2 am, February 15. Walker promptly notified the governor’s office.

That was the only time Walker’s diary or logs mention wind power. After the two late-night text messages from Magness, Walker’s report does not mention wind power again. But it does reference gas curtailments more than 70 times over the next four days, a possible reflection of the scope, severity, and impact of the shortages.

The power outages soon found their way back to natural gas suppliers. “The concerns related to natural gas moved from concerns about curtailment to concerns about electric outages for gas producers,” Walker wrote on February 15. Power plants, short on gas, couldn’t generate enough electricity to power the infrastructure that kept gas flowing from suppliers to users, including the power plants themselves. It created a feedback loop that compounded the problem further. “I met with and informed the office of the Governor about the situation,” Walker wrote. “I interacted throughout the day with ERCOT and the Governor’s office related to the ongoing issues.”

Between when the outages began and when Abbott appeared on Fox host Sean Hannity’s show on February 16, Walker had spoken with the governor’s office more than 50 times. By this time, natural gas production in the South Central US, which includes Alabama, Arkansas, Kansas, Louisiana, Mississippi, Oklahoma, and Texas, was down 30 percent, representing a loss of 7 percent of all US production.

Over the next three days, blackouts plagued the state. According to Walker’s logs, Samsung’s fab outside of Austin shut down on the morning of February 16. The facility lost 71,000 wafers to the disruption, costing the company at least $268 million. It took Samsung more than a month to bring it back online. Power was cut to NXP’s fab the next day. The company also lost a month of production, and it estimated that the outage cost it $100 million.

The same day that NXP’s fab was shut down, Abbott ordered natural gas producers to halt exports and sell to power plants in an effort to get them running again.

As the cold weather continued, millions remained without power, some for days. Pipes burst, flooding customers’ homes and forcing them to look elsewhere for fresh water. Chemical plants and fuel refineries spewed tons of toxic pollutants into the air as they executed emergency shutdowns. The effects of the gas shortage were felt as far north as MinnesotaAccording to the Texas Department of Health and Human Services, 151 people died of causes related to the disaster.

Chaser: We’ll probably learn more.

Nothing shakes the bushes like a good lawsuit.

Fortune:

A major European utility with operations in Texas is suing the state for intervening in power markets during the freak winter storm in February, costing the firm nearly $500 million.  

Wind-park owner RWE of Germany said its unit RWE Renewables Americas has filed a lawsuit against the Public Utility Commission of Texas (PUC) as well as the Electric Reliability Council of Texas (ERCOT), a nonprofit that operates the state’s power grid. 

It did not name the district court at which the motion was filed.

In February, a massive ice storm pounded the state, plunging millions into blackouts and crippling much of Texas’s energy grid. In response, the PUC issued an emergency order to hike the cost at which utilities buy wholesale electricity to the maximum level allowed under law to reflect the scarcity of power supply. 

With 70% to 80% of its own 2.6 gigawatts in installed wind power capacity temporarily knocked out by the storm, RWE was forced to purchase electricity at exorbitant prices to fulfill its obligations to customers. 

“The crucial point is actually that the regulator intervened to set the price at $9,000 per megawatt-hour. Interestingly enough, this didn’t even turn out to be economically sensible, since [the incentive] did not actually create any additional supply to the grid,” Michael Müller, finance chief of parent RWE, said last week.

Following the February ice storms, RWE incorporated the economic hit into its annual earnings guidance, issued in March. This foresees a decline in underlying profits of between 5% to 17% over the past year’s 3.2 billion euros owing mainly to sharply lower earnings at its onshore wind and solar division that includes the Texas operations. 

The Texas storms prompted a national debate over what share of power should come from fluctuating renewable sources. Texas Gov. Greg Abbott even singled out renewables as being especially to blame for the blackouts. While wind parks including RWE’s did indeed fail owing to the weather, so too did the typically more stable conventional power plants that burn coal or natural gas. 

Weather-related power outages in Texas have also had wide-scale effects on the broader economy. Several semiconductor wafer fabs operated by companies like Infineon, NXP, and Samsung had to be shut down and only gradually ramped back up, exacerbating a global shortage of chips for the auto industry.

Sky-high bills

Texas is a unique energy market in that Texans get roughly 90% of their electricity from independent producers within state lines. Therefore, much of the grid falls outside federal regulatory oversight. The catch: Texans learned that in times of crisis, they’re largely on their own; it is extremely difficult to import power from neighboring states. 

A number of Texas households whose electricity contracts were linked to wholesale power prices were hit with exorbitant bills as a result of the PUC’s decision, prompting an investigation by the oversight body.

“There were people that were hit with bills worth $15,000 for the week, so this is really an issue of broader relevance beyond just RWE,” Müller added. RWE doesn’t sell power to retail customers.

In March, all three individuals in charge of the PUC at the time of the decision resigned their post. First, DeAnn Walker stepped down as chairwoman at the start of the month, as did her successor, Arthur D’Andrea, after being promoted to the post, just two weeks into the job.

RWE said it will review the operation of its wind parks in Texas, the marketing of their electricity, and, in particular, whether to hedge its exposure to major deviations between the retail and wholesale power price to include winter months.

“We already do this for the summer months when these price peaks have been known to occur in Texas due to shortages in supply, with the important distinction that regulators did not intervene,” Müller explained.

8 Responses to “Blackout Bombshell: Texas Guv Knew of Gas Shortages for Days – Blamed Clean Energy Anyway”

  1. neilrieck Says:

    STEM (science, technology, engineering and math and/or medicine) are all about facts put conservative politics (world wide) seems to be about opinion and ideological dogma. Some conservative politicians took their lead from Trump so now think “facts do not matter; It appears that my base will believe an even bigger lie than before”. During his exit speech, George Washington warned Americans to “not follow Europe’s example of political parties”. I wonder when Americans will heed this warning

    • doldrom Says:

      STEMmers are disproportionately conservative.

      Politicians in general tend to have strained relations with facts, cherry picking insignificant details and obfuscating the bigger picture.

      As for parties, at least in Europe there is some choice, and every election brings new parties as others fade away. The red team/blue team setup in America guarantees that it’s always the same game, the political culture is stale, stultified, and lacks all dynamics. In Europe many countries threw voting machines out 10 years ago to do away with even the semblance of interference. I cannot think of a single European country where there are significant doubts about counting votes, whereas in America it is standard fare for every election. I was sure something would be changed after the Bush/Gore debacle, but nothing came out of that.
      Nobody can fix it because it’s been declared sacred.

      • rhymeswithgoalie Says:

        It’s depressing how many engineers are Creationists. Of course, nothing in the engineering course requirements teaches them to think critically about personal beliefs.

  2. jimbills Says:

    I remember at the time it was clear it was natural gas was the problem when Abbott said that. The Republicans have entered a phase of pure BS being the norm. The sad part is that Abbott is far from the worst example.

    The latest is that the Texas Legislature is passing stuff to make the public think they are acting, but it’s all superficial stuff. They are imposing a fine for utilities that don’t weatherize. That fine is $1,000. It’s far cheaper for them to just accept the fine if they get caught later on.

    They aren’t addressing weatherization of the well heads at all, which is where the real problem exists. It costs $20 to $50K per well to do that, and the total cost for one year is estimated to be about $200 million. That’s not even under consideration by the Legislature. (The well heads freeze because there’s a lot of water mixed in at the head from the fracking process.)

    A bill was written by a Democrat and a Republican to authorize the building of 10GW of weatherized natural gas power plants that also keep a continuous store of 7 days of natural gas supply on site. You’d think they’d go for that, and even though it’s NG it would address the issue in a real way, but the bill looks to have died. Republicans think it messes with the ‘free market’ too much.

  3. BL Brown Says:

    When the “free market” refers to a religious concept instead of a very limited kind of economic model, we have a problem, Houston.

    • jimbills Says:

      I’m betting that the ‘free market’ is most often just the rationalization. On a practical level what’s happening is that the major corporations are calling the representatives to say “support this, don’t support that” and then the representatives are looking for the most palatable rationale to tell the public.

      In the case of negating the weatherized 10GW NG plants with onsite supply, certain companies would oppose that because it would allow too much competition for themselves. They contact the representatives, and the representatives believe it’s more in their own political interests to comply with those companies and special interests that directly fund their next election than worry about something that might happen years down the road.

      But again, it’s all BS about belief in the free market. Those same Republicans will strongly support bailing out the current companies (which are still in trouble from the outages and raised prices), and those companies will then turn around and pass higher costs to the public, and the government will have less funds for social welfare. THAT will pass:
      https://www.texastribune.org/2021/05/06/texas-electric-bills-winter-storm-bailout/

    • doldrom Says:

      Free market where the costs of all the damage are an externality kept out of the books. Every ‘market’ and businessplan works by keeping partial accounts, concentrating gains for the few, but offloading risks and externalities on society at large.

      How many businesses have there been that went defunct, but left more damage or pollution to clean up than all their profits for 100 years? And we’re not even talking about intangibles or social damage. The whole environment or climate is not even in the books, so damage accrues automatically elsewhere.

  4. rhymeswithgoalie Says:

    The same day that NXP’s fab was shut down, Abbott ordered natural gas producers to halt exports and sell to power plants in an effort to get them running again.

    Say it ain’t so! Abbot interfering with the free market?


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